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Tackling the dark waters of the US oil industry: As earthquakes mount, billions were needed to change course




Oslo – Rystad Energy’s alarming analysis of seismic activity in major oil-producing regions in the United States reveals that the number of observed earthquakes has been increasing year by year since 2017.

Tremors exceeding 2 on the Richter scale quadrupled in 2020, and are on track to increase their frequency even further in 2021 if oil and gas activity sticks to current drilling methods at the same pace.

The Rystad Energy research, which examined data from Oklahoma, Texas, Louisiana and New Mexico, showed that earthquakes above a given magnitude accumulated to 242 in 2017, rising to 491 in 2018, 686 in 2019 and 938 in 2020.

About 570 such tremors were recorded during the first five months of 2021, which means we could see a new record high this year if this trend continues.

The trend appears to be moving not only to more frequent events, but also to larger ones. So far this year, there have already been 11 individual seismic events of magnitude 3.5 or greater, which can certainly be felt but may not cause any damage, a worrying sign compared to only six such events per year in 2018 and 2019, and 14 in 2020.

The largest contributor to the oil and gas industry in seismic activity is the disposal of brine through underground injection, and the volume of water disposed increased sharply from 2011 through 2019, before declining slightly in 2020 due to reduced activity caused by COVID -19 pandemic.

While disposal of water in the US onshore sector in 2011 was limited to 7.7 billion barrels, volumes increased rapidly over the following years, reaching about 10 billion barrels between 2014 and 2017. In 2018, the quantities disposed of reached 11.5 billion barrels and in The year 2019 is about 12.4 billion barrels. , before declining to 11.3 billion barrels in 2020.

“To keep water disposal at 2020 levels and offset future growth, the amount of water treated and recycled must increase in the future and the cost of doing so could accumulate to more than $1 billion annually for oil and gas producers.

“Costs can vary from region to region, but the Permian Basin has very competitive economics compared to other regions,” said Ryan Hassler, shale analyst at Rystad Energy.

To offset the annual growth in disposed water that Rystad Energy expects due to the upcoming boom in the US shale industry, treated water volumes should increase from 1.5 billion barrels in 2020 to 1.7 billion barrels in 2021 and 2022, to 1.8 billion barrels. barrels in 2023 and then rise further from 2024 onwards as water disposal needs will again exceed 12 billion barrels due to increased activity.

“Earthquakes are not the only environmental issue caused by water disposal. Freshwater sources in arid regions of West Texas and New Mexico threaten water supplies for local communities and essential agricultural activities, while environmental concerns surrounding the chemical makeup of the water produced are only fueling The fires of public hatred.

While ESG’s initiatives are positive, the real driver of increased water recycling adoption is cost. Refining and marketing companies continue to build pipeline infrastructure to allow operators cheaper access to produced water, while expanding existing recycling facilities or building new ones.

Rystad Energy estimates that by the end of 2022, the Permian Basin—including the Delaware and Midland sub-basins—could be able to meet between 40% and 43% of water demand from recycled produced water. To achieve this goal, additional investments from midstream space will be required to further reduce costs.

There are many ideas related to productive water that may help alleviate the growing pain of recycling infrastructure and the earthquake disposal problem. Recently, a legislative change in Texas allowed the Texas Commission on Environmental Quality (TCEQ) to take responsibility for allowing surface water produced to be discharged for beneficial reuse.

In theory, a change in regulatory agencies (TCEQ took over from the Environmental Protection Agency) should allow for a simpler licensing procedure, enabling operators to discharge volumes of water produced into surface waters for beneficial reuse in agriculture or wildlife.

However, this does not appear to be the case, as the Texas Commission on Environmental Quality has yet to administer a single permit since taking over responsibilities.

Currently, Wyoming only benefits from surface water drainage for beneficial reuse under Meridian Law 98 from the West, providing an additional market for water reuse.

On the other hand, California uses the water produced to irrigate crops, which, under the Clean Water Act, does not require an NPDES authorization (EPA) if the discharge is not into surface water such as the irrigation use cases.

So, while there are many avenues in which the water produced can be reused from an agriculture, irrigation or wildlife perspective, the truth is that Texas – with its massive volumes of water produced – currently does not benefit from anything. Rystad Energy


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